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Monday, February 21, 2005

Defense budget

Robert Higgs, a Senior Fellow in Political Economy at The Independent Institute, Johns Hopkins Economics PhD, and former fellow at the conservative Hoover Institution at Stanford says the Bush administration is lying about the size of the Defense budget.

Actually, Higgs says they are telling a whopper. This does not begin to tell the story:
the amount of money provided to the Department of Defense falls far short of constituting the total amount appropriated for military purposes.
How far short, you might ask?

Good question. First, note that the FY 2006 budget request is $419 billion, but that does not include a lot of military-related spending:
The Pentagon’s own budget—for fiscal year 2006, the widely reported amount of $419 billion in discretionary budget authority—does not include the costs of nuclear warheads, which the Department of Energy produces; the defense-related activities of the Department of State, including “foreign military financing”; the past military services being compensated currently by benefits provided through the Department of Veterans Affairs; the defense-related activities of the Homeland Security Department, such as the Coast Guard’s defense activities; various defense-related activities of several other federal departments; or the current interest costs of previous, debt-financed military activities.
And of course, the requested sum does not include the $82 billion "supplemental" amount sought for financing war in Iraq and Afghanistan, despite the fact that $75 billion of that figures goes to the Pentagon.

Using evidence he gathered for a study a couple of years ago (because current data is not available), Higgs adds up all the hidden spending and concludes that the actual defense budget is about twice the declared budget:
I estimate that the government’s total military-related outlays in fiscal year 2006 will be in the neighborhood of $840 billion—or, approximately a third of the total budget, as opposed to the 16 percent that one calculates by comparing the Pentagon’s $419 billion request to the administration’s total request, $2.57 trillion.
Read that again: $840 billion defense budget, which is about 1/3 of US government spending.

That means defense spending is 8.4% of a $10 Trillion economy.

Don't forget President Eisenhower's farewell warning in 1961:
This conjunction of an immense military establishment and a large arms industry is new in the American experience. The total influence -- economic, political, even spiritual -- is felt in every city, every State house, every office of the Federal government. We recognize the imperative need for this development. Yet we must not fail to comprehend its grave implications. Our toil, resources and livelihood are all involved; so is the very structure of our society.

In the councils of government, we must guard against the acquisition of unwarranted influence, whether sought or unsought, by the militaryindustrial complex. The potential for the disastrous rise of misplaced power exists and will persist.

We must never let the weight of this combination endanger our liberties or democratic processes. We should take nothing for granted. Only an alert and knowledgeable citizenry can compel the proper meshing of the huge industrial and military machinery of defense with our peaceful methods and goals, so that security and liberty may prosper together.
I wish there was a similarly credible 5 star general around these days to point all this out.

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